News Detail

Syverson: New Obamacare Taxes to Start January 1

9/25/2013

ROCKFORD– “A number of new fees and taxes are scheduled to go into effect as part of implementing the Obamacare Health Plan,” said Senator Dave Syverson (R-Rockford.) Syverson stated that one particular tax that begins January 1, 2014, the Transitional Reassurance Assessment Fee (Tax), will be felt more directly and broadly by taxpayers.

This new Transitional Reassurance Assessment will place a tax of $5.25 per month on every covered person in a group health plan. For example, if a single person has coverage under their employer’s health plan, that single employee would be taxed $5.25 a month, or $63 annually. For a family of four, the tax would be $21 per month, or $252 annually. The Insurance Carrier is required to collect the tax from the employer and remit the receipts to the Federal Government. Each employer will have to decide if and how to collect the tax from their employees.

“If this employee tax isn’t bad enough for struggling working families,” Syverson says, “There is more.” The same taxpayers will be hit a second time as the assessment is also being placed on Local and State Government Health Plans.

In most cases, unlike the private sector, Government Insurance Plans have labor agreements in place capping how much their employees pay for health coverage. This means that Local Government (taxpayers) will pick up this assessment on behalf of government employees and their dependents.

So, what will this cost local taxpayers? In the “Rockford MSA” which includes Winnebago and Boone County, you have an estimated 35,000 covered individuals (including dependents) under Government Health Plans. This includes school districts, municipalities, counties, townships and a variety of other smaller governmental units. The estimated tax these local governments will have to pay will be in excess of $2 million per year. Included in that number would be $500,000 just for the Rockford School District. “For Local Governments, that $2 Million can only come from either cutting services or raising property taxes,” Syverson said.

“Unfortunately, we’re still not finished with the effects of this tax because this assessment is also charged to all State Employees and their dependents which is estimated to be in excess of $17 Million a year. Again, contracts prohibit employees from paying this cost so the State will pick up the entire cost at a time when they can’t pay their current bills.”

Syverson says the last hit to Illinois taxpayers is that this assessment is also being placed on all Medicaid Managed Care Plans in the State, costing Illinois taxpayers an estimated $25 Million a year.

“All told, the cost to the Illinois budget and ultimately the taxpayers will be in excess of $40 Million a year. Add to that the cost to local governments (estimated at $58 million a year) and taxpayers, beginning January 1 we’ll see $100 million in new healthcare taxes in Illinois.”

Unfortunately, it is not just the public that is now becoming aware of these new taxes and the impact they will have on them, but also State and Local leaders who, for the most part, had no knowledge that these new taxes were going to be effecting them starting January 1. The prophetic words of Nancy Pelosi are certainly ringing true, “We have to pass the bill so you can find out what’s in it.”

The TRA fee is just one of 6 new fees and assessments being charged to fund the new health plan the other five fees are:

1)Patient Centered Outcomes Research Fee

2)Risk Adjustment Program Fee

3)Annual Health Insurance Industry Fee

4)Marketplace User Fee

5)Cadillac Excise Tax

While everyone was warned there would be a cost associated with implementing Obamacare few realized the direct impact it would have on local governments or working families. Washington needs to find a way to lessen this burden on taxpayers.